Businesses should act now and prepare for a changing climate, as efforts to meet internationally agreed targets for global warming are likely to fail, according to a new report from Zurich.
Published ahead of Climate Week NYC, a gathering of investors, governors and CEOs in New York this week, Zurich has recommended a three-step strategy to help companies strengthen their defences.
Alison Martin, group chief risk officer at Zurich and member of the executive committee, said: “Our analysis suggests that the current level of efforts to keep global temperatures from rising over 2-degrees celsius above pre-industrial levels will likely fail, so businesses should prepare for the physical consequences of a warming planet.”
“Companies must know the magnitude of their climate risk, so that they can prioritise actions based on their particular circumstances. It’s crucial for businesses to develop a climate resilience adaptation strategy and act on it now.”
Zurich’s report, Managing the Impacts of Climate Change: Risk Management Responses, examines two scenarios: one based on the failure to act on climate change, resulting in a steady rise in temperature and rising physical risk; the other assumes that effective measures are taken to reduce carbon emissions, with increasing transition risks to be managed in the shorter term.
It also details three-steps companies can follow to develop a climate resilience adaptation strategy:
- Identify the broad business and strategic risks
- Develop a granular view of the risks including individual locations
- Develop a mitigation strategy involving insurance and resilience, as well as strategic implications for business models
Martin said: “At Zurich, we encourage building more resilient critical infrastructure, which can help our customers and governments adapt to climate change. We firmly believe in prevention as the best form of protection. Adaptation costs for climate change effects may be significantly lower than damage costs. For example, through our Flood Resilience Programme, Zurich has demonstrated that every dollar spent on flood prevention measures on average saves five dollars on recovery efforts should a flood event occur.”
Martin added that she hoped the Zurich paper can provide the necessary guidance for businesses to address their exposures to climate change risks.